When an entity is first transitioning to IFRS, any adjustments required to bring GAAP measures in line with IFRS
A) are recognized directly in other comprehensive income.
B) are recognized directly in retained earnings.
C) must be accounted for by prospective application.
D) are ignored.

Question

Quizplus · Accepted Answer

When an entity is first transitioning to IFRS, any adjustments required to bring its previous GAAP measures in line with IFRS are recognized directly in retained earnings. This is to ensure that the opening balance sheet under IFRS reflects all adjustments necessary to comply with IFRS standards, without retroactively altering the income statement of prior periods.

When an Entity Is First Transitioning to IFRS, Any Adjustments